Beacon Container Finance is in the market with a $200 million container ABS deal, the company's securitization debut.
Kroll Bond Rating Agency has assigned a preliminary 'A' rating to the deal called Beacon Container Finance LLC, Series 2012-1. It is also the first rating for the Kroll within the ABS container space. Deutsche Bank Securities will act as lead manager on the deal.
The offering is structured with a 10-year expected maturity, 15-year legal final maturity, and certain performance tests that if breached could trigger a rapid amortization or result in the replacement of the manager.
The issuer is a wholly owned subsidiary of BTMU Capital Corporation, which is owned by The Bank of Tokyo-Mistubishi UFJ. According to a Kroll presale report, Beacon is the eleventh largest container leasing company in the world in terms of twenty-foot equivalent (TEU) with an owned and managed container fleet of 413,826 TEU as of June 30 having original equipment cost in excess of $1 billion.
It's a good time for container ABS issuance. According to Sept. 21 Nomura Securities report, the second container deal of this year issued by Cronos priced its $300 million, five-year deal at a yield of 3.85%.
The last offering brought to market by the issuer in May had priced at 4.25% due to demand side technicals while other consumer and esoteric sectors experienced spread tightening.
Spread tightening in the latest deal comes on the back of the insurance companies revising their target yields lower combined with a growing interest from money managers investing in the sector, according to the report.
"The performance of container lessors has remained resilient to the increase in fuel prices and slowdown in global trade that has impacted the shipping lines," analysts said in the report. "We think that container ABS performance should remain strong with the container lease rates holding up well in the medium term."